Four wholesalers- Metro Sefalana Cash and Carry Limited, Trans Africa (Pty) Ltd, Trident Holdings (Pty) Ltd and Trade World (Pty) Ltd - have been summoned to appear before the Competition Authority for possible resale price maintenance with their banner group members.
Competition Authority Director of Legal and Enforcement, Duncan Morotsi said these wholesalers have contravened Section 26 (1) of the Competition Act which states that an enterprise shall not enter into a vertical agreement with another business enterprise to the extent that the agreement involves resale price maintenance.
The Competition Authority conducted a Competitive Analysis of the Retail and Wholesale Sector Study in 2013 and concluded that there was anti-competitive conduct between these four wholesalers and their banner group members in contravention of section 26 (1) of the Act by entering into vertical agreements through resale price maintenance in the fast moving consumer goods market with their banner group members.
“The Authority in its investigation found that the wholesalers all issued their banner group members with pamphlets but did not make it clear that the prices were not binding on them and there was no reflection that the prices indicated on the pamphlets were just recommended prices. The banner group members were therefore selling the goods at the prices indicated on the pamphlets,” said Morotsi.
The Authority states that in terms of the law, a minimum resale price may be set provided it is made clear that the price is not binding on the seller and the product has the recommended price stated on it or the words ‘recommended price’ reflected next to the price.
Appearing before the Competition Commission on Tuesday, Trident Holding Representative, Jane Cross requested to be given 30 days to work on the problem and reach an amicable solution with the Competition Authority.
“We have been engaging with the Competition Authority so we thought there was no need for us to appear before the Commission since we have been in an engagement with The Authority. So in this case we request to be given time to work on our issue and reach an amicable solution with the Competition Authority,” she said.
All the respondents have requested to be given a 30 day period to work on their problems and reach an amicable settlement with the Competition Authority.
Competition Commission Chairman, Onkemetse Tshosa agreed with the Competition Authority to give them 30 days to work on their cases on the condition that they will reach a settlement with the Authority against the contravention.
Sefalana, Trans Africa and Trident Holdings have been given 30 days while Trade World was left pending as its representative Isaac Seloko, was not recognised as a lawyer because he referred himself as both the lawyer and consultant in the case.
Through its applications before the Commission, the Authority is seeking an order declaring that the Wholesalers have contravened section 26 (1) of the Act, an order declaring each Wholesaler liable for payment of an administrative penalty equal to 10 percent of annual turnover in terms of section 43 (4) of the Act and an order for the Wholesalers to cease and desist from engaging in prohibited practices in contravention of the Act.
Sefalana has 18 supermarkets under the retail name ‘Shoppers’, 25 Cash and Carry outlets trading under the name ‘Sefalana Cash and Carry’, three Hyper Stores located in Gaborone, Francistown and Mahalapye trading as ‘Sefalana Hyper Store’ and a cigarette distribution outlet trading as ‘Capital Tobacco’. The group has more than 400 banner group members.
According to Competition Authority analysis, the group entered into vertical agreements through resale price maintenance in the fast moving consumer goods market with their banner group members being Super Deal and Super 7.
Trident Holdings contravened through Big 11, Trans Africa with 3 Square while Trade World contravened Sec 26 (1) of the Competition Act through Trade Deal.